The Internal Revenue Service (IRS) has released four new "Life Cycles," online tools to help nonprofits with tax rules and requirements. Click here for the public charity Life Cycle page.

Each life cycle provides a graphical snapshot of five stages organizations typically go through during their existence: starting the organization; applying for tax-exempt status; filing required returns and other documents; maintaining compliance; and terminating the organization. . . . the new life cycles explain an array of issues, such as how to acquire an employer identification number; how to avoid jeopardizing an organization's exemption; how political campaign involvement could affect the organization's status and tax responsibilities; and how disclosure requirements must be met.

Last week the use of presidential candidate John Edwards' tax-exempt organization to finance campaign expenses was highlighted in a New York Times article.

A Campaign Legal Center blog responded noting how this practice is not a rare occurrence and calls on the reform community to address these abuses of exempt organizations rather than acting as "the functional equivalents of an inattentive board. The role of section 501(c)(3) public charities, of section 501(c)(4) social welfare organizations, of section 501(c)(5) labor unions, and of section 501(c)(6) trade associations as financing intermediaries for candidates and parties has been willfully ignored."

Others also responded to the New York Times piece, including a posting at TPMCafe which criticizes the Times for writing an article packed with errors. Meanwhile, Edwards defends his organization saying, "his nonprofit anti-poverty center's activities have been 'completely legal' and he does not plan to go beyond the legal requirements to disclose its donors."

The New York Times reports on some of the initial reactions to the 990 changes. According to IRS Exempt Organizations Director Lois Lerner, the redesign of Form 990 is "the biggest thing the exempt organizations division at IRS has done in the last quarter century." The form has not been overhauled since 1979. Lerner said the new draft will be easier for most charities to fill out and provide more information. However, some may be doubtful, and expect the lengthened draft to be criticized as being burdensome. Trent Stamp, president of Charity Navigator is skeptical of what the final form will look like and what actual effects the new form will have on charities.

But without regulatory enforcement on the back-end of this new document, for organizations that aren't playing by the rules, either in their actions or their reporting responsibilities, it's just another document. It means nothing without a fear of reprisal for the outlaws, and the IRS has no plans to expand their enforcement of non-profits, just what they ask of the groups under their purported jurisdiction.

The main part of the redesign consists of a 10-page document that all nonprofit organizations would complete, "Form 990 Core," which is accompanied by 15 supporting forms called schedules. Charities would only be required to fill out certain schedules depending on the type of organization. The Chronicle of Philanthropy ($$) suggests that the "most controversial part of the proposed form may be a section that asks specific questions about whether organizations follow certain management and governance policies and practices. For example, charities are asked if they have policies on conflicts of interest, whistleblowers, and how long to keep documents and when to get rid of them." As expected, Senators Max Baucus (D-MT) and Chuck Grassley (R-IA) welcome this news from the IRS. For more information, see Independent Sector and the IRS website.

The IRS released for comment and discussion proposed revisions to Form 990 and other supporting information. The IRS hopes to have the form ready for use for the 2008 filing year for returns filed in 2009. The redesign is based on three principles, "enhancing transparency, promoting tax compliance, and minimizing the burden on the filing organization." The comment period will run for 90 days, and comments are due no later than September 14, 2007.

Last October, Senate Finance Committee Ranking Member Max Baucus (D-MT) released a report examining interactions between five tax-exempt organizations and lobbyist Jack Abramoff and his associates, finding instances of serious abuse. And now most recently, the founder of one of those organizations was charged with tax evasion and obstruction of justice as part of the continuing federal criminal investigation. Italia Federici was president of the Council of Republicans for Environmental Advocacy and will plead guilty to lying to the Senate Indian Affairs Committee in 2005 as part of the ongoing investigation into the lobbying activities of Jack Abramoff. Read the LA Times story here.